Anti-graft body to probe stock trading software deal
Mar 19, 2019-
The Commission for the Investigation of Abuse of Authority is preparing to investigate possible corruption in the procurement of the software used to operate the Nepal Stock Exchange’s automated online trading system as it has been repeatedly crashing and disrupting trading, raising doubts about its quality.
According to the anti-graft body, it decided to launch a probe into the deal after receiving a complaint last week. “We received a complaint against the frontline regulator over the issue,” said Pradeep Kumar Koirala, spokesperson for the commission.
Stating that constant technical glitches had hit investor confidence, three investors—Kumar Sitaula, Madhav Gautam and Ishwor Gurung—filed a joint complaint asking the commission to conduct an investigation. The Nepal Stock Exchange bought the software from Indian vendor YCO for Rs190 million.
The bourse launched the new platform named Nepse Online Trading System on November 6 with the aim of providing direct access to individual investors allowing them to invest in shares by themselves. Technical problems emerged from the start, disrupting share transactions. Last week, the Nepal Stock Exchange was compelled to suspend trading for several hours after technical glitches obstructed transactions. Following the incident, the stock exchange asked YCO for clarification.
Similar problems appeared when the stock exchange offered access to stockbrokers for the first time last July. At that time too, trading was disrupted for a number of days. But the stock exchange conducted user acceptance testing and gave the go-ahead to the new platform instead of removing flaws in the software.
According to investors and stockbrokers, there are problems like the software hanging frequently and wrong information being displayed on the interface including stock prices. They also criticised the Nepal Stock Exchange for not providing adequate customer reference numbers to investors.
The Nepal Stock Exchange claimed it selected the vendor as per the Public Procurement Act, 2007, but the Securities Board of Nepal suspects misconduct while contracting the company to develop the software. The sector’s regulator also sees the existing problem in the system as one of the major causes behind the bearish trend in the secondary market.
The Nepal Stock Exchange awarded the contract to create the software to YCO in March 2016. Initially, the Securities Board disqualified the software company stating that it did not meet the criteria set by the regulator. Subsequently, YCO received the go-ahead from the court to execute the task.
As per officials of the Securities Board, they have also formed a taskforce to investigate the software deal. “The board believes that the stock exchange selected the company without properly assessing its capability,” a source at the board said.
Published: 19-03-2019 09:07